Ace Leasing acquires equipment and leases it to customers under long-term direct financing leases. Ace earns interest under these arrangements at a 6% annual rate. Ace leased a machine it purchased for $600,000 under an arrangement that specified annual payments beginning at the inception of the lease for five years. The lessee had the option to purchase the machine at the end of the lease term for $100,000 when it was expected to have a residual value of $160,000. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Calculate the amount of the annual lease payments.

Bargain Purchase Option

Table or calculator fuction n= ?, i= ?

Amount to be recovered (fair value) $?

Bargain purchase option $ ?

Amount to be recovered through periodic lease payment $?

Lease payment

Table or calculator function: I think PVAD of $1

n=?, i=?

Amount of fair value recovered each lease payment $? (Lease Payments)

* I would like to get the answer from the expert that the answer is right. Please provide step by step with calculate and explain.

Thanks,